* Industry shifting to automated programmatic ad buying
* Yahoo has focused on selling premium ad space -analyst
* Its ad exchange service seen as less popular than Google's
By Alexei Oreskovic
SAN FRANCISCO, July 17 Marissa Mayer's plan to
resuscitate Yahoo seems a simple one: get back the
eyeballs, sell more ads and charge higher prices. But the chief
executive's plan seems to have run into a major snag.
The price the company charges per ad slid 12 percent in the
April to June period, six times the decline just a quarter ago -
a fall that some say highlights how Yahoo has been caught
unprepared for the industry shift to automated, programmatic ad
Marketers increasingly prefer to buy online advertising
space through automated exchanges, where prices are
significantly lower, rather than paying top-dollar for premium
ads sold by a Web publisher's salesforce. Ads offered by
exchanges also allow marketers to aim ads in real time at
specific audiences, such as by gender or age.
Yahoo's ad focus has, however, centered on "on developing
media units that were much better for premium buys," said Shar
VanBoskirk, an analyst with industry research firm Forrester
Yahoo has its own programmatic ad technology with its Right
Media exchange. But analysts say the exchange is not as popular
as rival offerings, such as Google's DoubleClick exchange, which
is considered the industry standard.
Google, the world's No.1 Web search engine, will report its
second-quarter earnings on Thursday.
For many on Wall Street, the industry shift is one more
reason means Yahoo's turnaround remains "an open question",
especially given that Mayer has said the company remains first
and foremost an advertising company.
During Tuesday's post-earnings conference call with
analysts, Mayer said Yahoo was bullish on its advertising
technology and that it planned to focus on improving various
aspects of it in the coming quarters.
But even if Yahoo's ad exchange becomes more competitive,
the broader trend of programmatic advertising will continue to
pressure its business.
"Programmatic advertising technology continues to have a
downward bias to pricing in display advertising and I don't
expect that to improve anytime soon," said UBS analyst Eric
ONE YEAR MARK
Mayer took the reins at Yahoo in July 2012 after a
tumultuous period in which the company churned through several
CEOs and many of its top executives and engineers jumped ship.
She has revamped key products such as mail and the Yahoo
home page and jumpstarted acquisitions. Last month, Yahoo closed
its $1.1 billion acquisition of popular blogging service Tumblr.
Yahoo's stock has surged roughly 70 percent since Mayer took
the helm but much of the gain has come from stock buybacks and
from Yahoo's Asian assets, including a 24 percent stake in
Chinese e-commerce giant and potential IPO debutante Alibaba
Ad numbers, however, remain dismal. Apart from pricing,
display ad volumes and paid-clicks for search ads - an important
measure of viewers and readers' responsiveness to marketing -
continue to shrink.
Yahoo's share of the $17 billion U.S. display ad market is
expected to decline to 7.9 percent in 2013, down from a 9.2
percent share last year, while Google's share is expected to
grow to 17.6 percent. Facebook is likely to expand its market
share to 16.5 percent, research house eMarketer estimates.
"This core business is going to be ugly for quite some time
before it gets better," BGC analyst Colin Gillis said of Yahoo.
"This is just the beginning of the trend, of the drop in the
price per ad. You still have a pretty big gap between what you
can get direct and what you can get selling on an exchange."